Business & Economy - The Times Of Central Asia

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Freight Industry

New Port in Mangystau: Strategic Asset or Risk of Overcapacity?

Kazakhstan has announced plans to build a new seaport in the Mangystau region, presenting the initiative as a strategic move to strengthen the country's role in the East-West transit corridor. However, with existing Caspian ports in Aktau and Kuryk operating at less than one-third of their capacity, questions are being asked about whether the project addresses actual logistical needs or merely redistributes existing cargo flows. Kazakhstan’s current maritime infrastructure on the Caspian Sea includes the ports of Aktau and Kuryk, which together have a combined throughput capacity of over 27 million tons per year. Yet, in the first nine months of 2025, transshipment volume stood at only 6 million tons, despite a 9% year-on-year increase, placing current utilization at roughly 30%. Despite this, authorities in the Mangystau region argue that the proposed port in Karakiya district will boost national transit capacity, shorten delivery times on the China-Europe route by 7-15 days, and reduce logistics costs by 18-25%. The port’s design capacity is projected at 20 million tons annually. Proponents of the project cite periodic bottlenecks at Aktau and Kuryk, such as temporary loading restrictions and railcar congestion, as justification for new infrastructure. Still, forecasts from international institutions suggest that freight volume on the Trans-Caspian route could reach 10-11 million tons by 2030, while the eastern branch of the North-South corridor may handle up to 24.7 million tons. In light of these projections, some question whether expanding and modernizing existing facilities might be a more cost-effective solution. Indeed, upgrades are already underway. The container hub in Aktau is set to increase capacity to 250,000 TEU, while the multifunctional Sarzha terminal in Kuryk is expected to handle up to 12 million tons annually, developments that could significantly enhance throughput without requiring large-scale capital investment. Investment details are also attracting scrutiny. The new port’s estimated construction cost is $300 million, with several Chinese companies, owners of cargo bases and logistics assets, lined up as investors. Observers warn this could lead to a shift in transit flows in favor of the new facility, undermining existing ports in a scenario of economic “cannibalization.” There are also concerns about whether concession agreements might include compensation clauses for underutilized capacity, placing additional financial risk on the state. The project is slated to unfold in three phases: construction from 2025 to 2027; joint operation with Chinese partners from 2028 to 2037; and a phased transfer of management to the Kazakh side after 2038. The development is expected to create more than 2,000 jobs and will feature a railway connection and automated container terminal. In parallel, regional authorities are exploring maritime tourism as a complementary development strategy. Plans include launching Caspian Sea cruise routes and enhancing passenger facilities at the port of Kuryk, with a goal of attracting up to 625,000 tourists annually by 2028, envisioning a synergistic effect for the broader transport sector. While Mangystau has the potential to emerge as a key logistics hub in Central Asia, the success of the new port will hinge not on...

Railways

Opinion: Prospects for Central Asia’s Access to Persian Gulf Infrastructure

The agreement signed on December 8, 2025, between Saudi Arabia and Qatar to construct a high-speed railway linking Riyadh and Doha marks a pivotal development in transport connectivity across the Persian Gulf. Beyond its bilateral implications, the project could have broader consequences for transregional logistics, particularly for Central Asia and Kazakhstan. The 785-km railway will pass through key cities in Saudi Arabia’s Eastern Province, including Dammam and Al-Hufuf, and will connect King Salman and Hamad International Airports. Trains are expected to reach speeds exceeding 300 km/h, reducing travel time between the two capitals to approximately two hours. The six-year project is projected by officials to boost the combined GDP of both countries by around $30 billion and create up to 30,000 jobs. The Gulf Railway and New Regional Connectivity The Riyadh-Doha line is a central element of the Gulf Railway initiative, which is seeking to establish a unified railway network among Gulf Cooperation Council (GCC) member states, Saudi Arabia, Qatar, the UAE, Bahrain, Kuwait, and Oman, with a target date of around 2030. Originally envisioned primarily as a freight system, the Gulf Railway is increasingly incorporating high-speed passenger services alongside freight, reflecting the region’s push for greater internal integration and reduced dependence on air travel. The Riyadh-Doha segment forms a vital axis between the Gulf’s political and financial hubs and is expected to link with Saudi, Emirati, and Omani infrastructure, laying the groundwork for a more integrated regional transport system. Beyond the Peninsula While the Gulf Railway’s scope is geographically confined to the Arabian Peninsula, meaningful integration with Eurasia would require additional connectivity, particularly via land and multimodal routes through Iran, Turkey, and the Caspian region. Among these, the overland corridor through Iran is especially significant, though constrained by sanctions, financing risks, and political uncertainty. Kazakhstan-Turkmenistan-Iran Corridor Unlike many conceptual infrastructure proposals, the Kazakhstan-Turkmenistan-Iran railway, operational since 2014, is already a functioning freight corridor. It provides Central Asian nations with direct access to Persian Gulf ports and Middle Eastern markets. For Kazakhstan, the route offers strategic diversification away from traditional corridors. While no formal plans exist to link GCC rail infrastructure directly with Central Asia, the emergence of high-capacity Gulf rail corridors reshapes the long-term connectivity landscape. A future interface could allow Astana overland access to Gulf markets, while enabling reciprocal flows from the Gulf into Central Asia, China, and Europe. President Kassym-Jomart Tokayev has previously described Iran as a “gateway” to Southeast Asia and Africa. Kazakhstan has also outlined plans to establish its own logistics terminal in the Iranian port of Shahid Rajai in Bandar Abbas, further enhancing its position in Gulf-Eurasia trade flows. Iran’s Evolving Role Historically, Iran’s role as a transit state has been hampered by international sanctions and regional tensions. However, the 2023 normalization of relations between Saudi Arabia and Iran, brokered by China, has altered the regional calculus. Although still fragile, this diplomatic thaw improves prospects for long-term infrastructure projects involving Iran as a critical transit link between the Persian Gulf and Eurasia. Alternatives and Their...

Labor Market

Kazakhstan Sets 2026 Quota for Foreign Workers

Kazakhstan has set its 2026 quota for the employment of foreign workers at 0.25% of the country’s total labor force, according to the Ministry of Labor and Social Protection. The annual quota is part of the government’s policy to regulate labor migration and safeguard the domestic job market. The 2026 quota includes specific allocations across several categories of foreign workers: 726 permits for senior managers and their deputies (first category), 3,402 for heads of structural divisions (second category), 5,893 for specialists (third category), and 3,131 for skilled workers (fourth category). An additional 4,994 permits have been allocated for seasonal labor. Separately, the quota for foreign labor employed in private households has been set at 2.9% of Kazakhstan’s total labor force for the year. The new quotas mark an increase from 2025, when the initial foreign labor cap was 0.2%, equivalent to 14,800 permits. In March 2025, that figure was raised to 16,500 following requests from regional authorities grappling with labor shortages. As of December 1, 2025, 14,103 foreign nationals were officially employed in Kazakhstan. The largest contingents came from China, Uzbekistan, Turkey, and India, underscoring the country’s continued dependence on migrant labor in construction, industry, and other specialized sectors. The quota-based system reflects Kazakhstan’s broader strategy to meet economic labor demands while prioritizing employment for domestic workers, particularly amid ongoing infrastructure expansion and industrial development.

Energy Sector

Tajikistan Plans $6.5 Billion Investment in Energy Sector

Tajikistan will require approximately $6.5 billion to implement its 2026-2030 Energy Sector Development Program, with funding expected from a combination of external and internal sources, including international partners and the state budget. Planned funding sources include: Development partners: $3.94 billion Private investment: $2.56 billion The state budget, primarily to finance the ongoing construction of the Rogun Hydropower Plant (HPP), which is supported annually through a dedicated budget line. In 2025 alone, more than $970 million was allocated from the state budget to the Rogun project, accounting for roughly 20% of all approved treasury expenditures. Support for Tajikistan’s fuel and energy complex remains one of the top budgetary priorities. The draft state budget for 2026 earmarks $1.61 billion for the sector, equivalent to 22.4% of total planned expenditures. The program will primarily focus on large-scale hydropower development. In parallel, the government aims to expand renewable energy capacity. Solar power plants with a combined capacity of 1.5 GW are planned for construction in the Sughd and Khatlon regions. Authorities also plan to explore the potential for wind energy. Another key objective is increasing electricity exports and contributing to frequency regulation within Central Asia’s regional power networks. Achieving this will require infrastructure upgrades, including construction of the Rogun-Saihun 500 kV transmission line and the modernization of existing substations. Domestically, the program calls for the replacement of outdated equipment, renovation of distribution networks, and the installation of smart meters to enhance energy reliability and efficiency.

Money

Kazakhstan Accelerates Shift Away from Cash Payments

Kazakhstan is rapidly embracing cashless payments, with the share of cash withdrawals in card transactions continuing to decline each year, according to data from the National Bank. While the country has not yet reached the levels seen in leading digital economies, recent trends suggest Kazakhstan is closing the gap. A recent study by analysts at Finprom.kz compares Kazakhstan’s transition to cashless payments with global trends. It highlights the persistent divide between countries where cash is nearly obsolete and those where it remains dominant. The global variation is illustrated by the Cash Index, compiled by FOREX.se, which ranks 122 countries based on the share of daily transactions made with cash. Using data from Statista, Numbeo, central banks, and other global sources, the index offers an average estimate of cash usage across the world. According to the Cash Index, countries with the lowest rates of cash use, just 10%, include South Korea, Norway, China, Iceland, and Australia. Similarly low figures are reported for Scotland, England, and Denmark (12% each). Analysts attribute this to strong fintech ecosystems, widespread broadband internet, high smartphone penetration, and robust consumer protection frameworks. In contrast, cash remains dominant in countries where poverty, limited banking access, and weak infrastructure prevail. In Myanmar, daily cash transactions account for 98% of all payments, followed by Ethiopia and Gambia at 95%. Other high-cash-use countries include Albania, Cambodia, Laos, Lebanon, Nepal, and Pakistan, all averaging around 90%. While Kazakhstan is not included in the Cash Index due to its tourism orientation, National Bank statistics provide insight into local trends. From January to October 2025, cash withdrawals via Kazakhstani and foreign payment cards totaled $44.37 billion, an 8.6% increase compared to the same period in 2024. Yet the overall trend favors non-cash transactions. The share of cash withdrawals in total card turnover fell from 13.5% to 12.9% over the year, comparable to figures seen in developed economies. By contrast, in 2019, cash accounted for more than half of card-based transactions. This dropped to 34.1% in 2020 and has continued its steady decline. Regional data reveal that the shift to cashless payments is uneven across the country. In January-October 2025, the share of cash withdrawals in total card transactions ranged from 8.3% to 27.4%, depending on the region. The lowest shares were recorded in the Almaty region (8.3%), Almaty city (9%), and the Turkestan region (9.4%). Astana and the Atyrau region followed with 14.4% and 14.8%, respectively. The North Kazakhstan region reported the highest share of cash withdrawals.

Excise Tax Revenues

Alcohol and Tobacco Lead Kyrgyzstan’s Excise Tax Revenues

Alcohol and tobacco products continue to be the primary sources of excise tax revenue for Kyrgyzstan’s state budget, according to the Ministry of Finance’s final report on budget revenues for the first 11 months of 2025. The report highlights excise taxes as one of the most stable and predictable sources of state income. From January through November 2025, total excise tax revenues exceeded $222 million. Alcohol producers remain the top contributors. During the reporting period, they transferred $38 million to the budget. Vodka producers accounted for the largest share at $25.5 million, while breweries contributed approximately $9.4 million. Producers of brandy, wine, and other alcoholic beverages paid significantly less. As a result, the alcohol sector continues to lead all industries in excise tax contributions. Despite reduced domestic production, tobacco companies dominate excise revenues from imports. In the same period, excise taxes on tobacco products imported from Eurasian Economic Union (EAEU) countries brought in $101 million, with an additional $4.4 million from imports originating outside the EAEU. Revenue is no longer limited to traditional cigarettes. The report notes contributions from heated tobacco products and electronic cigarettes. While their current share remains modest, steady annual growth in excise payments for these categories points to shifting consumer habits. Kyrgyz authorities consider excise taxes on alcohol and tobacco not only a fiscal mechanism, but also a tool of social policy. Gradual increases in tax rates are intended to simultaneously boost revenue and, according to government projections, reduce consumption of harmful products. The state's role in the alcohol sector warrants particular attention. In early 2023, the country’s largest alcohol producer, Ayu, along with its distilleries and vodka factories, was voluntarily transferred to state ownership. Since then, smaller industry players have voiced concern that the government may incrementally tighten its grip on the sector and effectively establish a monopoly. Overall, the data confirm that so-called “harmful” goods, alcohol and tobacco, remain the most lucrative sources of excise tax revenue for the Kyrgyz budget.